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TMI Blog1966 (12) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... is it to be interpreted according to section 2(b) of the Central Provinces and Berar Sales Tax Act, 1947? (2) Under the facts and circumstances of the case, are the sales amounting to Rs. 13,05,449-3-0, liable to the payment of sales tax under Explanation II in clause (g) of section 2 of the Central Provinces and Berar Sales Tax Act, 1947?" 2.. The assessment period is from 1st October, 1947 to 31st December, 1948. The assessee-company is a manufacturer of certain stone-wares, junctions, gully traps, channels etc. of various sizes and dimensions as also domestic pottery. After the C.P. and Berar Sales Tax Act, 1947 (hereinafter referred to as the Act) came into force, the assessee had supplied the goods manufactured by it to the tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,- * * * (b) 'contract' means any agreement for carrying out for cash or deferred payment or other valuable consideration- (i) the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property, or (ii) the installation or repair of any machinery affixed to a building or other immovable, property, or (iii) the overhaul or repair of any motor vehicle." 4.. It is admitted that the sales in question were not in execution of the contracts as defined in section 2(b) of the Act. The contention of the assessee, however, is that the word "contract" used in the proviso to section 4(1) must be given general meaning as understood under the Indian Contract Act. This contention was repelled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell. We are not prepared to accept this interpretation. The word 'contract' must receive the interpretation of that word as stated in section 2(b), unless there is anything repugnant to the subject or context. At the commencement of the Act there must have been a large number of labour-cum-material contracts outstanding and it would have been a great hardship to such contractors to have to pay sales tax which they were not likely to recover from the owners. That was not the case with the sale of merchandise. We are therefore of the opinion that the proviso to section 4 is inapplicable to the instant case." [page 226]. The same view was taken by the Nagpur High Court in another case, Hirji Govindji v. Commissioner of Sales Tax[1955] 6 S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dships of the Supreme Court were not considering the question as to whether the State Legislatures could give an artificial definition of the word "contract". The same is the case in the other two decisions of the Supreme Court. In the case of Pandit Banarsi Das Bhanot(3), which specifically considered the provisions of the C.P. and Berar Sales Tax Act, 1947, their Lordships of the Supreme Court observed: "..........the expression 'sale of goods' in Entry 48 has the same meaning which it has in the Sale of Goods Act, 1930, that in a building contract there is no sale of materials as such, and that it is therefore ultra vires the powers of the Provincial Legislature to impose tax on the supply of materials." [page 393]. Their Lordships f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Wah Stone and Lime Quarry Co. v. Punjab State[1963] 14 S.T.C. 167. The definition of "contract" in the Punjab Sales Tax Act is the same as in the C.P. Act. Section 4 of the Punjab Act is also similar to the C.P. Act inclusive of the proviso. There it was urged that the word "contract" used in the proviso should be given not the restricted meaning given in the definition but should be used in general terms as understood under the Indian Contract Act. This is what their Lordships of the Punjab High Court observed: "It is argued by Mr. Sarin, counsel for the applicants, that the special notion of a contract introduced by section 2(c) of the Punjab General Sales Tax Act is unwarrantable and has been rejected by their Lordships of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the word "contract" in the Sales Tax Act; nor has the definition been struck down. What has been pointed out in the Supreme Court cases is that where the contract as defined in the Acts is an indivisible contract, in that case sales tax cannot be imposed on the notional value of the material that is utilized in the building or the works contract. 6.. Even after the decision of the Supreme Court, the proviso under section 4 can be brought into operation if the building or works contract as defined in the Act is not an indivisible contract; in that case, the sale price of the material agreed to be supplied can be exempted by operation of the proviso under section 4 of the Act. The purpose why the proviso was enacted has been stated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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